Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. In the past 3 years Rice Midstream Partners LP (NYSE:RMP) has returned an average of 5.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Rice Midstream Partners should have a place in your portfolio. See our latest analysis for Rice Midstream Partners
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is their annual yield among the top 25% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does Rice Midstream Partners fare?
Rice Midstream Partners has a trailing twelve-month payout ratio of 64.24%, which means that the dividend is covered by earnings. Going forward, analysts expect RMP’s payout to increase to 78.29% of its earnings, which leads to a dividend yield of 8.76%. In addition to this, EPS should increase to $2. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Rice Midstream Partners as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Rice Midstream Partners generates a yield of 6.82%, which is high for Oil and Gas stocks.
Taking into account the dividend metrics, Rice Midstream Partners ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for RMP’s future growth? Take a look at our free research report of analyst consensus for RMP’s outlook.
- Valuation: What is RMP worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether RMP is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.